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Chapter 5: Consolidation (consolidated income tax treatment for groups of entities)

Last updated 17 May 2020


For income tax purposes, consolidation is optional. However, if the head company of a wholly owned resident group decides to consolidate, all its wholly owned Australian resident group entities must become members of that consolidated group.

Once a group has consolidated the choice becomes irrevocable and the consolidated group it is treated as a single entity for income tax purposes.

Where a foreign company, either directly or through its wholly owned foreign group, has multiple entry points of investment into Australia through Australian resident companies, special multiple entry consolidated (MEC) group rules will apply to the wholly owned resident companies and their wholly owned resident subsidiary entities.

The following losses and tax attributes can generally be brought into a consolidated group and used by the group's head company:

  • losses (including foreign losses)
  • franking credits
  • excess foreign tax credits
  • attribution account surpluses, and
  • attribution tax account surpluses.

Note: This chapter simply provides a summary of the provisions that relate to the application of income attributed from controlled foreign companies (CFCs) and included in the assessable income of a head company of a consolidated group. Detailed information on the operation of consolidation is contained in the Consolidation reference manual (NAT 6835) - see also More information.